Question 1

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

Accepted Answer

A)  $10,000. 
B)  whatever she would have purchased with the $10,000 instead. 
C)  whatever she would have earned had she not been in college. 
D)  whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college. 
A)  $10,000. 
B)  whatever she would have purchased with the $10,000 instead. 
C)  whatever she would have earned had she not been in college. 
D)  whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college.

Question 2

A trade-off involves weighing costs and benefits.

Accepted Answer

A) True 
 B)False

Question 3

A dozen friends got together to celebrate a birthday. If the birthday cake is cut into 12 pieces of the same size and each of the 12 partygoers gets a slice, this cake distribution is:

Accepted Answer

A)  efficient but not equitable. 
B)  equitable but not efficient. 
C)  efficient and equitable. 
D)  equitable. 
A)  efficient but not equitable. 
B)  equitable but not efficient. 
C)  efficient and equitable. 
D)  equitable.

Question 4

For an economist, the cost of something is:

Accepted Answer

A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it. 
A)  the amount of money you paid for it. 
B)  what you gave up to get it. 
C)  always equal to its market value. 
D)  the quantity of resources used to produce it.

Question 5

You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you buy only Sports Illustrated. This statement best represents this economic concept:

Accepted Answer

A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  "How much" is a decision at the margin. 
D)  There are gains from trade. 
A)  Resources are scarce. 
B)  The real cost of something is what you must give up to get it. 
C)  "How much" is a decision at the margin. 
D)  There are gains from trade.

Question 6

The cost of leaving the skating championship before it ends is _____, while the cost of staying for the entire match is _____.

Accepted Answer

A)  the opportunity cost of not seeing the perfect 10 performance; zero-the ticket to the championship is already paid, so there is no cost 
B)  the opportunity cost of not seeing the perfect 10 performance; the opportunity cost of whatever else you could have done during that time 
C)  zero-you don't have to pay to leave; zero-the ticket to the match is already paid so there is no cost 
D)  the cost of the ticket; the cost of the ticket 
A)  the opportunity cost of not seeing the perfect 10 performance; zero-the ticket to the championship is already paid, so there is no cost 
B)  the opportunity cost of not seeing the perfect 10 performance; the opportunity cost of whatever else you could have done during that time 
C)  zero-you don't have to pay to leave; zero-the ticket to the match is already paid so there is no cost 
D)  the cost of the ticket; the cost of the ticket

Question 7

Sometimes the government varies its spending, depending on the needs of the country. This statement best represents economic concept that:

Accepted Answer

A)  resources should be used as efficiently as possible to achieve society's goals. 
B)  when markets don't achieve efficiency, government intervention can improve society's welfare. 
C)  overall spending sometimes gets out of line with the economy's productive capacity. 
D)  government policies can change spending. 
A)  resources should be used as efficiently as possible to achieve society's goals. 
B)  when markets don't achieve efficiency, government intervention can improve society's welfare. 
C)  overall spending sometimes gets out of line with the economy's productive capacity. 
D)  government policies can change spending.

Question 8

Scarcity in economics means that:

Accepted Answer

A)  we do not have sufficient resources to produce all of the goods and services we want. 
B)  the wants of people are limited. 
C)  there must be poor people in rich countries. 
D)  economists are clearly not doing their job. 
A)  we do not have sufficient resources to produce all of the goods and services we want. 
B)  the wants of people are limited. 
C)  there must be poor people in rich countries. 
D)  economists are clearly not doing their job.

Question 9

If a market is in disequilibrium:

Accepted Answer

A)  it will continue unless there is government intervention. 
B)  no individual will be better off doing something different. 
C)  there are opportunities for people to make themselves better off. 
D)  it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium. 
A)  it will continue unless there is government intervention. 
B)  no individual will be better off doing something different. 
C)  there are opportunities for people to make themselves better off. 
D)  it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium.

Question 10

Which of the following statements is TRUE?

Accepted Answer

A)  The concept of equilibrium requires that all individuals have an equal amount of income. 
B)  If a market is in equilibrium, the price in that market will not fluctuate by more than 5%. 
C)  If a market is in equilibrium, there will be no remaining opportunities for individuals to make themselves better off. 
D)  A market is in equilibrium when the number of buyers is equal to the number of sellers. 
A)  The concept of equilibrium requires that all individuals have an equal amount of income. 
B)  If a market is in equilibrium, the price in that market will not fluctuate by more than 5%. 
C)  If a market is in equilibrium, there will be no remaining opportunities for individuals to make themselves better off. 
D)  A market is in equilibrium when the number of buyers is equal to the number of sellers.

Question 11

If an economy has NOT achieved efficiency, there must be ways to:

Accepted Answer

A)  increase opportunity costs. 
B)  eliminate inequity. 
C)  make some people better off without making others worse off. 
D)  increase the incentives for its citizens to follow their own self-interest. 
A)  increase opportunity costs. 
B)  eliminate inequity. 
C)  make some people better off without making others worse off. 
D)  increase the incentives for its citizens to follow their own self-interest.

Question 12

The basic concern of microeconomics is:

Accepted Answer

A)  to keep business firms from losing money. 
B)  to prove that capitalism is better than socialism. 
C)  to study the choices people make. 
D)  to use unlimited resources to produce goods and services to satisfy limited wants. 
A)  to keep business firms from losing money. 
B)  to prove that capitalism is better than socialism. 
C)  to study the choices people make. 
D)  to use unlimited resources to produce goods and services to satisfy limited wants.

Question 13

Manny is attending college and majoring in economics. By doing so, Manny is improving his:

Accepted Answer

A)  land. 
B)  labor. 
C)  capital. 
D)  human capital. 
A)  land. 
B)  labor. 
C)  capital. 
D)  human capital.

Question 14

A choice made _____ is a choice whether to do a little more or a little less of something.

Accepted Answer

A)  at the fringe 
B)  in the beginning 
C)  at the margin 
D)  after the fact 
A)  at the fringe 
B)  in the beginning 
C)  at the margin 
D)  after the fact

Question 15

When the United States and Mexico trade:

Accepted Answer

A)  the United States will be worse off because wages in Mexico are so low. 
B)  Mexico will be worse off because the United States is a stronger economic power. 
C)  both Mexico and the United States will be better off. 
D)  both Mexico and the United States will be worse off. 
A)  the United States will be worse off because wages in Mexico are so low. 
B)  Mexico will be worse off because the United States is a stronger economic power. 
C)  both Mexico and the United States will be better off. 
D)  both Mexico and the United States will be worse off.

Question 16

Gains from trade exist for:

Accepted Answer

A)  individuals only. 
B)  states only. 
C)  countries only. 
D)  individuals, states, and countries. 
A)  individuals only. 
B)  states only. 
C)  countries only. 
D)  individuals, states, and countries.

Question 17

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of:

Accepted Answer

A)  marginal analysis. 
B)  scarce resources. 
C)  resources being used as efficiently as possible to achieve society's goals. 
D)  opportunity costs. 
A)  marginal analysis. 
B)  scarce resources. 
C)  resources being used as efficiently as possible to achieve society's goals. 
D)  opportunity costs.

Question 18

Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is:

Accepted Answer

A)  zero-the tickets were free. 
B)  the price listed on the ticket. 
C)  whatever Khalil would have done had he not gone to the opera. 
D)  the price listed on the ticket and whatever Khalil would have done had he not gone to the opera. 
A)  zero-the tickets were free. 
B)  the price listed on the ticket. 
C)  whatever Khalil would have done had he not gone to the opera. 
D)  the price listed on the ticket and whatever Khalil would have done had he not gone to the opera.

Question 19

Scarcity exists when:

Accepted Answer

A)  making choices among two or more alternatives is not necessary. 
B)  individuals can have more of any good without giving up anything. 
C)  individuals can have more of one good but only by giving up something else. 
D)  resources are unlimited. 
A)  making choices among two or more alternatives is not necessary. 
B)  individuals can have more of any good without giving up anything. 
C)  individuals can have more of one good but only by giving up something else. 
D)  resources are unlimited.

Question 20

The problem of scarcity is confronted by:

Accepted Answer

A)  industrialized societies only. 
B)  preindustrial societies only. 
C)  societies governed by communist philosophies only. 
D)  all societies. 
A)  industrialized societies only. 
B)  preindustrial societies only. 
C)  societies governed by communist philosophies only. 
D)  all societies.

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

A trade-off involves weighing costs and benefits.

A dozen friends got together to celebrate a birthday. If the birthday cake is cut into 12 pieces of the same size and each of the 12 partygoers gets a slice, this cake distribution is:

For an economist, the cost of something is:

You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you buy only Sports Illustrated. This statement best represents this economic concept:

The cost of leaving the skating championship before it ends is _, while the cost of staying for the entire match is _.

Sometimes the government varies its spending, depending on the needs of the country. This statement best represents economic concept that:

Scarcity in economics means that:

If a market is in disequilibrium:

Which of the following statements is TRUE?

If an economy has NOT achieved efficiency, there must be ways to:

The basic concern of microeconomics is:

Manny is attending college and majoring in economics. By doing so, Manny is improving his:

A choice made _____ is a choice whether to do a little more or a little less of something.

When the United States and Mexico trade:

Gains from trade exist for:

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of:

Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is:

Scarcity exists when:

The problem of scarcity is confronted by:

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 1: First Principles

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:

A trade-off involves weighing costs and benefits.

A dozen friends got together to celebrate a birthday. If the birthday cake is cut into 12 pieces of the same size and each of the 12 partygoers gets a slice, this cake distribution is:

For an economist, the cost of something is:

You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you buy only Sports Illustrated. This statement best represents this economic concept:

The cost of leaving the skating championship before it ends is _____, while the cost of staying for the entire match is _____.

Sometimes the government varies its spending, depending on the needs of the country. This statement best represents economic concept that:

Scarcity in economics means that:

If a market is in disequilibrium:

Which of the following statements is TRUE?

If an economy has NOT achieved efficiency, there must be ways to:

The basic concern of microeconomics is:

Manny is attending college and majoring in economics. By doing so, Manny is improving his:

A choice made _____ is a choice whether to do a little more or a little less of something.

When the United States and Mexico trade:

Gains from trade exist for:

Corner offices in high-rise office buildings usually cost more to rent than other offices. This best illustrates the economic principle of:

Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is:

Scarcity exists when:

The problem of scarcity is confronted by:

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

The cost of leaving the skating championship before it ends is _, while the cost of staying for the entire match is _.